Correlation Between Bionomics and Molecular Partners

Can any of the company-specific risk be diversified away by investing in both Bionomics and Molecular Partners at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bionomics and Molecular Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bionomics Ltd ADR and Molecular Partners AG, you can compare the effects of market volatilities on Bionomics and Molecular Partners and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bionomics with a short position of Molecular Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bionomics and Molecular Partners.

Diversification Opportunities for Bionomics and Molecular Partners

0.0

Correlation Coefficient

Bionomics  Molecular Partners

Pay attention - limited upside

The 3 months correlation between Bionomics and Molecular is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bionomics Ltd ADR and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners and Bionomics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bionomics Ltd ADR are associated (or correlated) with Molecular Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Partners has no effect on the direction of Bionomics i.e., Bionomics and Molecular Partners go up and down completely randomly.

Pair Corralation between Bionomics and Molecular Partners

Given the investment horizon of 90 days Bionomics Ltd ADR is expected to generate 1.69 times more return on investment than Molecular Partners. However, Bionomics is 1.69 times more volatile than Molecular Partners AG. It trades about 0.17 of its potential returns per unit of risk. Molecular Partners AG is currently generating about 0.01 per unit of risk. If you would invest  343.00  in Bionomics Ltd ADR on December 31, 2024 and sell it today you would earn a total of  145.00  from holding Bionomics Ltd ADR or generate 42.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	59.02%
Values	Daily Returns

Bionomics Ltd ADR  vs.  Molecular Partners AG

Bionomics ADR

Risk-Adjusted Performance

Good

Over the last 90 days Bionomics Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Bionomics showed solid returns over the last few months and may actually be approaching a breakup point.

Molecular Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Molecular Partners AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Molecular Partners is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bionomics and Molecular Partners

The main advantage of trading using opposite Bionomics and Molecular Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bionomics position performs unexpectedly, Molecular Partners can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Molecular Partners will offset losses from the drop in Molecular Partners' long position.

The idea behind Bionomics Ltd ADR and Molecular Partners AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.